Sugar reform: Now or never

April 12th, 2013

‘This is the closest we’ve come to actually reforming our domestic sugar program since I’ve been editor’

It is time for all candy makers to get off their duff and send “e-mails, voice mails and money” to Congress to get rid of our national sugar welfare program. Pardon the Warren Zevon parody, but I believe this is the closest we’ve come to actually reforming our domestic sugar program since I’ve been editor of Candy Industry.

Recently, a bipartisan coalition of Senators and Congressmen — yes, your read that correctly — introduced the Sugar Reform Act of 2013 (Senate Bill 345), which aims at lowering sugar prices without the use of federal supply interventions.

Consequently, as one would expect, sugar reform is a subject near and dear to his heart.

“Illinois is the ‘Candy Capital of the World,’ but in the last decade the number of jobs in the industry has steadily decreased because of our current policies, which artificially inflate the price of sugar,” Kirk told reporters last month in announcing sponsorship of the bill. “The [Sugar Reform Act] will end unfair pricing in the industry and keep companies from shipping skilled manufacturing jobs overseas.”

And while I recognize that our current Congress is grappling with various serious issues as we speak — everything from gun control to immigration reform — ending our sugar welfare program should also be a key priority.

After all, in the end, we’re talking jobs.

Consider a study conducted by two Iowa State University economics professors John Beghin and Amani Elobeid. In 2011, they wrote a paper that analyzed the probable effects of ending the government’s sugar program and moving to free trade in sugar.

According to the Heartland Institute,Beghin and Elobeid concluded that the following would occur if sugar reform would be enacted:

“The U.S. price of raw sugar falls by 24 to 34 percent (rounded) depending on the year of the projection. The wholesale refined sugar price falls by 32 to 40 percent, and the retail refined sugar price falls by 26 to 33 percent. These effects are net of the increase in the world price of sugar induced by larger imports by the US economy.

In addition, the two professors saw the following scenarios:

The raw sugar price on the world market increases by 2 to 4 percent or by about 1 cent per pound.

These U.S. price changes reduce the cost of sugar in food processing and sugar retailing with benefits accruing to food processors and consumers. However, they induce contracting margins for all U.S. sugar industries from sugar crops to refiners.

Domestic sugar production (beet sugar and raw cane sugar) initially declines about 10 percent and then recovers to nearly unchanged.

Consumption rises about 15 percent. Imports rise about 80 percent. Cane sugar refiners operate at full capacity using raw sugar imports as input. The United States shifts from being a net importer of sugar-containing products to being a net exporter.

Of course, those opposed to sugar reform challenged the professors’ stats.

There are, however, plenty of other statistics to consider, such as the sugar program creating a $14-billion hidden tax for consumers and businesses, the loss of 125,000 jobs because of sugar-using companies going offshore, and U.S. sugar prices averaging 64 to 92 percent higher during the past four years.

Several confectionery executives have spoken out on the need to support sugar reform — George Stege of Ford Gum Machine and Co. and Joe Dutra from Kimmie Candy Co. to name a few — inviting their local congressman to visit plants and see for themselves the kind of technology and automation confectionery manufacturing supports. More importantly, our politicians then actually see the kinds of jobs the industry creates.

As Michael Rosenberg, president and ceo of Promotion in Motion pointed out to me, the best argument for the confectionery industry in getting Congress and citizens to push for sugar reform involves jobs creation.

Our May cover story focuses on the growth of Promotion in Motion, a truly fascinating success story. It also illustrates the fact that the company has created 400 jobs in New Jersey — a place not necessarily known for manufacturing.

It’s something Rosenberg is particularly proud of, as he should be. It’s also something he did in spite of our government’s sugar program. Imagine what sugar reform could do in unleashing the creation of additional jobs in sugar-related industries such as confectionery, bakery, cereal, beverage and dairy.

So don’t delay, write and phone your Congressman. Contact the NCA on how to get a legislator to visit your facility, regardless of whether it’s large or small. And let the White House know. As that old Presley song tells us, “It’s now or never.”